ASST CIT 14(1), MUMBAI V. MUNNALAL B. AGARWAL, MUMBAI

ITA 5531/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8144 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 02-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Keywords: Earning of tax free income; Additional evidence; Revised return; Ignorance of law
• Section: 143(3); 54

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI B. R. BASKARAN , AM & SHRI SANDEEP GOSAIN, JM ./ I.T.A. NO . 5531/MUM/2014 ( / ASSESSMENT YEAR: 2011 - 12 ) ACIT 1 4(1 ) 2 ND FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI - 21 / VS. MUNNALAL B. AGARWAL 57 - A KEDIA HOUSE, 4 TH FLOOR, KHATTAR GALLI, C.P. TANK, MUMBAI ./ ./ PAN/GIR NO. A AAPA7536N ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI V. VIDHYADHAR / RESPONDENTBY : NONE / DATE OF HEARING : 19 /12 /201 7 / DATE OF PRONOUNCEMENT : 21 /12/2017 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE PRESENT APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF COMMISS I ONER OF INCOME TAX (APPEALS) - 25 , MUMBAI DATED 06.06.14 FOR AY 20 11 - 12 ON THE GROUNDS MENTIONED HEREIN BELOW: - 2 I.T.A. NO. 5531 /MUM/201 4 MUNNALAL B. AGARWAL 1 )ON THE FACTS AND IN THE CIRCUM STANCES OF THE CASE AND IN THE L AW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,42,67,660/ - ON ACCOUNT OF LONGTERM CAPITAL GAIN BY ACCEPTING THE ASSESSEE'S PLE A REGARDING IGNORANCE OF LAW IN CLAIMING DEDUCTION U/S 54. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT TH E ASSESSEE HAD NOT CLAIMED THE DEDUCTION U/S 54 IN THE RETURN OF INCOME AND THE BASIC RULE OF THE DEDUCTION IS THAT THE DEDUCTION MUST BE CLAIMED IN THE RETURN, THEN ONLY THE SAME CAN BE VERIFIED AND ALLOWED. 3)ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE FINDING OF THE AO WAS IN ACCORDANCE WITH THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS CIT (2006) 204 CTR 182 SC, WHEREIN IT WAS HELD THAT THE ASSESSING AUTHORI TIES HAVE NO JURISDICTION TO ENTERTAIN A CLAIM NOT MADE THROUGH A RETURN OF INCOME OR THROUGH REVISED RETURN OF INCOME. 4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED BY PLACING RELIANCE ON THE CASE LAW VIZ. M/S. SANC HIT SOFTWARE & SOLUTIONS PVT. LTD. VS CIT (2012) 349 ITR 404, WHICH IS NOT RELEVANT TO THE INSTANT CASE. 3 I.T.A. NO. 5531 /MUM/201 4 MUNNALAL B. AGARWAL 5) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IH LAW, THE LD. CIT (A) ERRED IN GRANTING RELIEF OF RS. 3,89,001/ - ON ACCOUNT OF INCOME FROM V IDEO PARLOR BY ACCEPTING THE ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS WITHOUT PROVIDING OPPORTUNITY TO THE AO IN VIEW OF THE RULE 46A(3)(A) OF THE INCOME TAX RULES, 1962. . 6)ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 34,48,898/ - ON ACCOUNT OF UNDISCLOSED INCOME FROM THE FIRM M/S. SAGAR CORPORATION, RECEIVED BY THE ASSESSEE. 7)ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE BOOKS OF ACCOUNT OF M/S. SAGAR CORPORATION WERE FINALIZED BEFORE THE ASSESSEE FILED HIS RETURN OF INCOME, IN OTHER WORDS, TH,E ASSESSEE HAD NO REASON F OR NOT DISCLOSING THE EXEMPT INCOME IN HIS RETURN OF INCOME OR REVISED RETURN OF INCOME. ALSO, THE LD. CIT(A) HAS ERRED IN ACCEPTING THE ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS WITHOUT PROVIDING OPPORTUNITY TO THE AO IN VIEW OF THE RULE 46A(3)(A) OF THE INCOME TAX RULES, 1962. 4 I.T.A. NO. 5531 /MUM/201 4 MUNNALAL B. AGARWAL 8)FOR THE ABOVE MENTIONED REASON AND ANY OTHER REASONS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE ORDER OF THE CIT(A) BE QUASHED AND THAT OF THE AO BE RESTORED. 9)THE APPE LLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND, WHICH MAY BE NECESSARY. . ' 2 . AT THE VERY OUTSET, IT IS NOTICED THAT NONE HAS APPEARED ON BEHALF OF ASSESSEE IN SPITE OF SEVERAL CALLS AND EVEN NO APPLICATION FOR ADJOURNMENT WAS MOVED . ON THE OTHER HAND L D. DR IS PRESENT IN THE COURT AND IS READY WITH ARGUMENTS. THEREFORE WE HAVE DECIDED TO PROCEED WITH THE HEARING OF THE CASE EX - PA RTE WITH THE ASSISTANCE OF THE L D. DR AND THE MATERIAL PLACED ON RECORD. 3. AS PER THE FACTS OF THE PRES ENT CASE, THE ASSESSEE FILED RETURN OF INCOME FOR A.Y. 2011 - 12 ON 28.03.2013 DECLARING TOTAL INCOME OF RS.25,90,583/ - WHICH WAS PROCESSED U/S 143(1). THE CASE WAS SE LECTED FOR SCRUTINY, AND AFTER SERVING STATUTORY NOTICES , 5 I.T.A. NO. 5531 /MUM/201 4 MUNNALAL B. AGARWAL T HE ORDER U/S 143(3) WAS PASSED O N 13.0 3.2014 MAKING VARIOUS ADDITIONS/DISALLOWANCES, VIZ. (I) ADDITION TO INCOME UNDER THE HEAD CAPITAL GAINS OF RS. L,42,67,660/ - ; (II) ADDITION TO INCOME FROM HOUSE 'PROPERTY OF RS 2 7,46 , 669/ - ; (III) ADDITION TO INCOME FROM VIDEO PARLOUR BUSINESS OF RS. 6,56,721/ - ; (IV ) ADDITION ON ACCOUNT OF UNDISCLOSED INTEREST RECEITOFRS.65,466/ - ; AND (V) ADDITION ON ACCOUNT OF UNDISCLOSED SHARE OF PROFIT FROM FIRM OF RS.34,48,898/ - CONSEQUENTLY, THE TOTAL INCOME OF ASSESSEE WAS DETERMINED AT RS. 2,38,75,997/ - . 4. AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. NOW BEFORE US, THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BY RAISING THE ABOVE GROUNDS. GROUND NO. (1 TO 4) 5 . SINCE ALL THE ABOV E GROUNDS RAISED BY THE REVENUE ARE INTER - CONNECTED AND INTER - RELATED AND RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN DELETING THE ADDITIONS OF RS. 1,42,67,660 ON 6 I.T.A. NO. 5531 /MUM/201 4 MUNNALAL B. AGARWAL ACCOUNT OF LONG TERM CAPITAL GAIN BY ACCEPTING THE ASSESSEES PLEA REGARDING IGNORANCE OF LAW IN CLAIMING DEDUCTION U/S 54 OF THE I.T. ACT, THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE SAME THROUGH THE PRESENT COMMON ORDER. 6 . WE HAVE HEARD LD. DR AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. WE FIND, AS PER THE FACTS OF THE CASE, THAT THE ASSESSEE CLAIMED DEDUCTION U/S 54 AGAINST LONG TERM CAPITAL GAIN ON THE SALE OF FLAT. THE AO MADE ADDITION S ON THE GROUND THAT THE SAID DEDUCTIONS WERE NOT CLAIMED BY THE ASSESSEE BY WAY OF RETURNED OF INCOME OR REVISED RETURN OF INCOME AND HENCE THE SAME W AS NOT ALLOWED. DURING THE APPELLATE PROCEEDINGS, LD. CIT(A) AFTER CONSIDERING THE PURCHASE AGREEMENT OF THE FLAT SALE, SALE AGREEMENT AND PURCHASE AGREEMENT OF NEW FLATS HAD FOUND MERITS IN THE ASSESSEES CLAIMS FOR INDEXATION ON ACCOUNT OF THE CLAIM U/S 54 AGAINST PURCHASE OF NEW FLATS AND THUS DELETED THE ADDITIONS MADE BY RS. 1,42,67,660/ - BY THE ASSESSEE . LD. CIT(A) FAILED TO APPRECIATE THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GOETZE INDIA PVT. LTD VRS. CIT (2006) 204 CTR 182 (SC) 7 I.T.A. NO. 5531 /MUM/201 4 MUNNALAL B. AGARWAL WHEREIN IT WAS HELD THAT THE ASSESSEE AUTHORITIES HAVE NO JURISDICTION TO ENTERTAIN A CLAIM, NOT MADE THROUGH A RE TURNED OF INCOME OR THROUGH REVISED RETURNED OF INCOME. ADMITTEDLY, IN THIS CASE, NO CLAIM WAS MADE BY WAY OF RETURNED OF INCOME OR REVISED RETURNED OF INCOME. THEREFORE, IN SUCH CIRCUMSTANCES, WE SET ASIDE THE ORDER OF LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF AO WITH A DIRECTION TO PASS AFRESH ORDER OF ASSESSMENT WHILE KEEPING IN VIEW THE PRINCIPLES LAID DOWN BY HONBLE SUPREME COURT IN CASE OF GOETZE INDIA PVT. LTD (SUPRA) VRS. CIT (2006) 204 CTR 182 (SC) ON ALL THE GR OUNDS RAISED BY THE ASSESSEE. BEFORE PARTING, WE MAY MAKE IT CLEAR THAT OUR DECISION TO RESTORE THE MATTER BACK TO THE FILE OF AO SHALL IN NO WAY BE CONSTRUED AS HAVING ANY REFLECTION OR EXPRESSION ON THE MERITS OF THE DISPUTE, WHICH SHALL BE ADJUDICATED B Y THE AO INDEPENDENTLY IN ACCORDANCE WITH LAW. RESULTANTLY THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. GROUND NO. (5 TO 7) 7 . SINCE ALL THE ABOVE GROUNDS RAISED BY THE ASSESSEE ARE INTER - CONNECTED AND INTER - RELATED AND RELATES TO CHALLENGING THE 8 I.T.A. NO. 5531 /MUM/201 4 MUNNALAL B. AGARWAL ORDER OF LD. CIT(A) IN ACCEPTING THE ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS WITHOUT PROVIDING OPPORTUNITY TO THE AO IN VIEW OF THE RULE 46A(3)(A) OF THE INCOME TAX RULES, 1962 , THEREFO RE WE THOUGHT IT FIT TO DISPOSE OF THE SAME THROUGH THE PRESENT COMMON ORDER. 8 . WE HAVE HEARD LD. DR AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. WE FIND, AS PER THE FACTS OF THE CASE, THAT T HE LD. CIT(A) HAD GRANTED RELIEF OF RS. 3,89,001/ - ON ACCOUNT OF INCOME FROM VIDEO PARLOUR & ALSO DELETED THE ADDITIONS OF RS. 34,48,898/ - MADE BY AO ON ACCOUNT OF UNDISCLOSED SOURCES BY ACCEPTING THE ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE DURING TH E APPELLATE PROCEEDING AND IN THIS RESPECT NO OPPORTUNITY TO THE AO WAS PROVIDED IN VIEW OF RULE 46A(3)(A) OF THE I.T. ACT. IN ORDER TO VIEW THE PROVISIONS OF RULE 46A(3)(A) OF THE I.T. ACT ARE MANDATORY AND HENCE LD. CIT(A) OUGHT TO HAVE PROVIDED AN OPPOR TUNITY TO THE AO TO VERIFY THE DOCUMENTS SUBMITTED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS BY WAY OF ADDITIONAL EVIDENCES. HENCE IN THESE CIRCUMSTANCES, WE SET ASIDE THE ORDER 9 I.T.A. NO. 5531 /MUM/201 4 MUNNALAL B. AGARWAL OF LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF AO WITH A DIRECT ION TO VERIFY THE DOCUMENTS SUBMITTED BY ASSESSEE DURING THE APPELLATE PROCEEDINGS AND THEREAFTER PASS AFRESH ORDER OF ASSESSMENT ON ALL THE GROUNDS RAISED BY THE ASSESSEE. BEFORE PARTING, WE MAY MAKE IT CLEAR THAT OUR DECISION TO RESTORE THE MATTER BACK T O THE FILE OF AO SHALL IN NO WAY BE CONSTRUED AS HAVING ANY REFLECTION OR EXPRESSION ON THE MERITS OF THE DISPUTE, WHICH SHALL BE ADJUDICATED BY THE AO INDEPENDENTLY IN ACCORDANCE WITH LAW. RESULTANTLY THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STA TISTICAL PURPOSES. GROUND NO. 8 & 9 . 9. THESE GROUNDS ARE GENERAL IN NATURE, THUS REQUIRES NO SPECIFIC ADJUDICATION. 10 . IN THE NET RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 1 ST DEC, 2017 SD/ - SD/ - ( B. R. BASKARAN ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 2 1 .12 .201 7 SR.PS . DHANANJAY 10 I.T.A. NO. 5531 /MUM/201 4 MUNNALAL B. AGARWAL / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI